Get a CLUE, Don’t Buy a Lemon!

Generally, your home will cost about the same to insure as similar homes in your neighborhood. A home’s prior loss history can affect your insurance costs, however. The more claims that have been filed on that property, the more the insurer will likely charge to cover it. While some claims are purely random, many claims can indicate structural problems or a lack of maintenance—both of which will affect your costs of ownership.

How do you find out about prior insurance claims? Most major property insurers in the U.S. submit claims information to the Comprehensive Loss Underwriting Exchange database. LexisNexis compiles this information into a CLUE report, which you can obtain for free at https://personalre
ports.lexisnexis.com.

If an insurer participates, you can get information on claims filed within the last seven years. The report will show the name of the insurer, policy number, type of policy and claim number. It will list the individual who owned the policy at the time of claim, and the current claim status (open, not covered, closed, under deductible amount or withdrawn). It will also show whether the claim is being subrogated, or being submitted to a third party that caused the damage for payment.

Home buyers will want to pay particular attention to claims for fire, water and physical damage to the structure. The report will not say what part of the house was affected, but you can ask the homeowner for that information. If a report indicates one of these types of claims, we recommend getting a professional house inspection to ensure repairs were done properly.

If the homeowner did not disclose the loss, that can serve as a red flag that he/she might be concealing other information. Please keep in mind that some insurers do not share data with CLUE, so not all claims will show up on a report.